USAP Paid Envision $9 Million to Stay Out of Dallas per FTC; Union Updates, Krewe Acquired

Tracy: [00:00:00] It's like living in, in bizarro world, right? From a business standpoint, wow, that makes great sense. From an ethical, regulatory, and legal standpoint, yeah, it's not, not really illegal in this, in this environment, so. 

Joe: Not to this degree. Not to this degree. Not 

Tracy: to this degree

Joe: Back with two of the smartest people in the business. Tracy Young, chief operating officer of Essential Anesthesia. How are you, Tracy? Great to have you on 

Tracy: I'm doing well. Thanks for having me back. 

Joe: Excellent. Excellent. Your, your thoughts are always very welcome. And Gerry Keeling, I don't actually know your title.

I just know that if you don't know who Gerry Keeling is with anesthesia billing, you're, you're probably not doing a good job. How are you, Gerry? 

Gary: I'm doing good. I'm working to get a title called Joe Rodriguez's assistant, but- Yeah. ... I can't seem to get that job. I'm the Vice President of Anesthesia Services for Coronis.

Joe: All right. VP Anesthesia Services. All right. Well, let's, let's get into the docket. We've got a lot to talk about. Uh, first, just a little bit of housekeeping. [00:01:00] I want to share that, you know, someone asked me, "Is this a CRNA show or, or what?" And I was like, "Uh, it's an anesthesia show." It's an, you know, it's a news, business, and commentary show.

It's not a CRNA show. It's not an anesthesiologist show. But we are adding an anesthesiologist to the lineup, uh, to get that lens. Perspective is good, so he'll be coming in the next few weeks. And then just we have gotten-- I think everybody on the line has gotten a lot of positive feedback. But this is Lindy from St.

George, Utah: "The podcast you're doing is great. I've learned a lot in listening to it." I have learned a lot as well, Lindy, especially from these folks on the line. I love... That's one of the differences, right? The interviews were challenging. I actually really enjoy these, uh, conversations every time. Uh, Jake from Atlanta: "It feels fresh and unique in a sea of podcasts where nothing feels fresh and unique," and that's by design, Jake.

We want to hear from credible people on a regular basis, and especially provide a contrast to all the kind of garbage that's out there on social media. And then, uh, Louise Scuderi from [00:02:00] Facebook, uh, somebody I've known a long time: "I've been listening to your renewed About the Rest podcast, and your teachings are spot on."

Not sure if they're teachings, Louise, but we'll take it. "Thank you for sharing the learning moments, as they can be quite vulnerable." Um, we do it, and it makes us stronger, and that's, uh, that's, that's what we wanna do. All right. Well, thank you to everybody for the positive feedback. Keep sending our way.

We're gonna end with a question at the end of the show as well. Let's get into the docket. First, Houston Chronicle, July twenty-first, twenty twenty-six. As is our custom here, I'll give a rundown on the background of the story, and then we'll get commentary from our esteemed guests. On the screen, for those of you listening, is Representative Tom Oliverson.

Forgive me if I'm not pronouncing that correct. Anesthesiologist and USAP partner. He's also an elected representative. He was on a health committee. And Katrina Daniel, who's the chief healthcare officer of, uh, the Teacher Retirement System of Texas, ascent gave a pretty... Y-you know, I don't know if you guys have heard it yet, we'll add it in post, gave a pretty [00:03:00] damning testimony on USAP specifically, calling them out for consolidation, for driving up costs.

Speaker 4: Significant consolidation under one particular group, US Anesthesia Partners, which is backed by a private equity firm. And in fact, they-- we've seen significant increase in anesthesia costs. It actually came under scrutiny of the FTC. This anesthesia consolidation that I was just talking about In TRS claims, we saw in active care an eleven million dollar increase as a result of this consolidation, which is nearly half a percentage of a premium.

So- Yeah, point four percent of the entire- You have trend, and you add another half a percent on top of that because of anesthesia cost alone. 

Joe: Just a quick rundown, and we'll get some commentary here. The retirement system claim was when we look at them, USAP, compared to other anesthesiologists, we pay about twice as much.

We're gonna get into this. Okay. They outlined some aspects, eleven million [00:04:00] dollars in annual cost contribution attributed to USAP alone. Four hundred thousand teachers are affected. That only accounted for a point four percent increase on the premiums, but it's still a lot of money. Right, USAP said their claims are patently false.

Tom Oliverson was... You know, when you're reading the full article, we wanna be fair here. He did say, "Look, you know, consolidation can increase costs, but the math here isn't, isn't mathing exactly." And then just the final image for those listening, they did share, this is the image from the Teachers Retirement System, just kind of a damning, uh, report from their perspective at least, around consolidation.

Anesthesia increased about a hundred percent from their perspective, their data. Don't know how accurate that is. But they also mentioned hospital mergers as contributing significantly to the premiums as well. With all that being said, Tracy Young, let's start with you. What are your thoughts here? There's a lot to digest.

Tracy: Yeah. Thanks, Joe. There, there's, there's so much to unpack here. Um, it, it's almost hard figuring out where to start. But what I, I think I'll [00:05:00] start with is something that a lot of people maybe brush over and skip, and that is from a purely business sense, the things that USAP were doing makes a whole lot of business sense, right?

They were consolidating the marketplace. They were gaining scalability. They were doing things to be able to get commercial rates up to levels that really aren't seen anywhere else for any other provider groups. And more than likely, they were controlling cost as well too, right? So I mean, through their consolidation, through their business practices, everything they did was an excellent business case.

Mm. The problem is It was against regulatory, um, basically compliance. Uh, there were some unethical things that they've accused of being, being, um, maybe done to increase their consolidation efforts and some of those other things. So when you couple those two together, [00:06:00] um, you start to realize that a lot of the practices, uh, were, were basically unethical and, um, probably against the law.

Hence, the Federal Trade Commission kinda came in and, um, is forcing some reworking of their, of their business models and stuff like that, which I think is great. It's gonna be good for competition. The other thing to unpack and there-- and that we, um, maybe frequently gloss over is if when we talk about their rates from commercial payers- Yeah

they drove them up and drove them up and drove them up. The problem with comparing their rates to everyone else's is the assumption that everyone else's is a fair rate. 

Gary: Mm-hmm. 

Tracy: What I mean by that is everyone's rates are so compressed, they're not enough in general to pay for anesthesia staff. So we bill and collect.

The vast majority of times, we never collect enough to pay for anesthesia staff. So the underlying assumption should be that the average rate Is not a good rate. It's not enough [00:07:00] to actually cover the expense of the service. So when you, when you start to think about the things that they're doing, why they're doing it, it makes sense.

Then you start thinking about the regulatory practices and some of the methods they went, they went through to consolidate some of these market practices. Um, and then you start thinking about the rates. Like there's a, there's a lot to digest and unpack here besides they're evil, they're driving up costs, they've done a bunch of illegal things.

So there, there's some nuances here underlying kind of all of this. I am not going to advocate or, or, or protect USAP's business practices in, in any sense of the word, but I think thinking about their motives is also helpful when we start thinking about what's going on in the marketplace as well. 

Joe: Indeed.

Indeed. And we're gonna get into some of the-- I think that's a great response, very nuanced, very thoughtful. We're gonna get into some of the specific USAP practices. But before we get there, Gary, your thoughts on this, on this testimony, and again, just so everyone remembers, all the listeners remember the rules of our [00:08:00] podcast, which is if it's public, it's fair game.

None of these responses are coached. This is just, uh, our personal opinion. So Gary, go ahead. What are your thoughts here? 

Gary: Well, a-again, I, I say it all the time, I think ego and jealousy are the worst two human emotions, right? So I seem to hear it all the time that anesthesia providers just get paid too much money, right?

So that's an easy thing to go to a politician and say, "Look it, their salaries are going through the roof. They're, they're, they're just paid too much," right? And you, you have to remind them this is- Hmm ... a free market economy, right? So supply and demand is the major driver of costs. And they're trying to find a scapegoat here, and I agree with Tracy.

I mean, I'm not, uh, I'm not, uh, I have no relationship with USAP, and, you know, they, they did business well there. And again, they probably should have done things differently in, in some respects. But the major driver to the increased costs is the shortage, right? So if you need anesthesia providers to deliver care [00:09:00] and, uh, there's a shortage of them and they keep opening more and more anesthesia-- anesthetizing sites, is it's going to drive up the costs.

And to now try to say, well, geez, you know, they're, they're getting paid too much, we need to figure something out. The, the system has to supply more providers. That's the only way you're going to level the field here. But I don't I think it's bad for the industry when you now have politicians on both sides coming out and saying it's because of anesthesia our premiums have gone up.

Which- 

Joe: Mm ... 

Gary: in reality is anesthesia is pitifully paid by Medicare and Medicaid, and they are the frequent flyers to hospitals. So y- y- it's a much bigger issue than just trying to hang some blame onto, onto a specialty. So I don't think it bodes well if you're gonna start having these political discussions for people that don't really understand, don't [00:10:00] understand how the business works, so.

Joe: Yeah, I think, you know, you guys have heard me say the off, oft-repeated claim, uh, the government generally shouldn't be regulating anesthesia 'cause we have to teach the government about anesthesia, and then they try to regulate it, which doesn't make a lot of sense. We should try to drive that control down.

Uh, you know, a couple thoughts here, uh, for consideration. First, you know, to your point, you know, when they say, "Hey, we're paying twice as much," and I think right now f- it feels like we're I don't think anyone's defending USAP h-here as much as we're trying to inject some nuance into the indus- into the conversation, right?

Some thoughtfulness, some actual insight maybe is a better way to say it. If you get an independent getting fifty and you get a huge group getting a hundred, you're still getting subsidized, right? That's the, the piece that everybody misses. Tracy, you alluded to that already. Gary, I think your point on the free market's key, right?

P- Anesthesiologists, CRNAs make a lot of money 'cause that's but what people are willing to pay, and that's it. That's the only reason. That's just a function of, you know, supply and demand. I think we're gonna see major overcorrection here. You know, the, the point I would make [00:11:00] here that's different is if we're talking about healthcare costs, and I've been thinking about this a lot, we're not-- like, going after the professionals isn't the right answer.

And Gary, I think, you know, we need more professionals. That's a part of it. But if we're really talking about systemic driving down of expenses, um, we need much, much better, and now I'm gonna sound, you know, like this is not a political statement, but we need much, much better public health, like massive investment into public health.

Like I, the-- I heard recently Scott Galloway talk about, um, the government subsidizing GLP-1 drugs for broad and underserved populations, and I thought this was a very good idea because if we're not making those investments, ultimately anesthesia's gonna cost what it's gonna cost, but it's so much cheaper to prevent than to treat, and we just haven't figured that out as an industry, right?

There's, there's other things as far as, you know, with USAP specifically, and I'm gonna show a slide here. There's been a [00:12:00] lot going on with USAP. You know, I don't think anyone from USAP would get on here and say, "Hey, we're known for maximizing the value of our professionals, for increasing the autonomy of our folks," right?

And I'm not saying-- I'm saying that in kind of a, a regular way. But generally they are... You guys can disagree with me. I mean, this is my impression. Generally, they're adhering to a very tightly controlled ACT approach, right? They're just not maximizing the value of their skilled professionals. And when I think about lowering costs, it's public health, number one, it's broad coverage but privately implemented, which is similar to the Switzerland model, and number three, it's use your professionals.

And we, we, we don't do that in our country by and large. So I think They kind of fail on that, at least from my opinion. They c- they don't seem to be a leader in that third bucket, and I... You know, there, on the screen here we see a lot. They've been criticized, uh, from a state attorney general point of view from Colorado.

You guys are familiar with this case. [00:13:00] Uh, also from the Federal Trade Commission, right, in Texas specifically. That's where a lot of this came from. Um, before I move on, a- any other closing thoughts on this, uh, very public hearing of Representative Oliver Sinan? You know, obviously he's allowed to come on if he really wants to and discuss.

I doubt he ever will, but any- anybody, Tracy? 

Tracy: Yeah, Joe, so- something you said, um, kinda came to mind when you were talking about the healthcare system and driving down cost. I, I think healthcare system is a misnomer. I've said this numerous, numerous times. We have a sick care system Right? The only way hospitals make money is when someone gets sick and goes to the hospital.

Hospitals don't make profits out of keeping people healthy and keeping people out of the hospitals. By and large, we have a sick care system, and the emphasis on fee for service reimbursement, whether it be anesthesia, whether it be surgical, whether it be the, uh, emergency room, anywhere in the healthcare system, um, that fee [00:14:00] for service model, especially in the procedural space, benefits from people not doing well.

It's a sick care system. Hmm. Hmm. So it's really hard to drive down cost when your incentives are not aligned with the reimbursement and the financial incentives as well. So anyway, when you said that, that kind of sparked something in my mind. I, I, I've said it a couple of times, maybe even on a, on a previous webinar here, but maybe not.

But lastly, w- you know, when we think about cost versus reimbursement, right, I, I think differentiating those two things, I think we've kind of used cost maybe on both sides of the equation. Uh, there's cost to the healthcare system, and then, which is, and then there's cost to the insurers. Hmm. The teachers union was upset because USAP drove up their cost.

So when one of their members, a teacher, would have to have anesthesia services, they had to pay more for the service when USAP did it versus when an independent group did it or any other group, basically, because their rates, [00:15:00] um, from what I can tell, are significantly higher than anyone else in the industry and in the market in those areas where they've gotten that consolidation.

Joe: Yeah. USAP, that is, right? 

Tracy: USAP, that is correct. 

Joe: Mm-hmm, mm-hmm. 

Tracy: And then there's the cost of the providers, right? Who bears the brunt of that cost? It's, it, it could be the insurers, but it's also the hospitals through pass-through subsidies, right? So that's like kind of a different cost that is oftentimes not aligned with reimbursement, 'cause the cost of the providers is based on supply and demand.

Mm-hmm. Anesthesia groups, hospitals who employ anesthesia professionals, they're all out there competing for the same set of eyes every time they have a job ad, every time they need to fill a vacant spot. They're competing in a supply-constrained environment. So how do they do it? You know, culture, quality of life, all those things, that's great to, for retention.

However, for recruiting, it usually comes down to dollars. Uh- Hmm ... what's the compensation gonna be? What's the, what's the sign-on bonus? Yeah. Potentially those types of things. So- It's gonna be the money, yeah ... before we move [00:16:00] on from that, I just kind of want, that's nuanced as well too, right? 'Cause we, you could say cost But what do we mean by cost?

Is it reimbursement? Cost to whom? Is it the cost to whom? 

Joe: Yeah. 

Tracy: Yeah. 

Joe: Yeah, indeed. I think, uh, it's a great point. We've talked about the consolidation with USAP and, uh, you know, it's interesting. I, I, I don't know how much like, uh, Coronis, for example, has-- how much percentage of a market, uh, they have in a given place.

I don't think Coronis or Essential or certainly not Guide, uh, has been on the radar of this. But the consolidation for the audience, I mean, these-- USAP, it was remarkable. Like, like you said, uh, Tracy, like everything they did was reasonable. Like if I'm an individual, if I can get a better price by comparing two car dealerships 'cause I'm going to pick up a Tesla, I feel like everything on the show, I have to be like, it's not political, right?

I'm gonna pick up a Tesla after this show. Um, you know, like I'm gonna go to the best, the place with the best price to sell my previous vehicle. That's just good business. What USAP was good business, but they, they [00:17:00] took it really far, right? In terms of they got to not 10%, 20%. And by the way, it's 30% that the FTC, that's one of their flags, right?

One of the thresholds that puts you under greater scrutiny. They were at 50 and 60%. And then, right, and this came out, uh, in the documents, allegedly, they paid $9 million. Speaking about these very specific actions, not, not unethical to run a business, not unethical as an individual to spend less than you earn, which is really all a business is at some level.

USAP initially proposed that they, USAP, would pay Envision $9 million annually not to provide anesthesia services in Texas, specifically in Dallas. And again, this is not a good look. 

Tracy: Yeah. 

Joe: But I, I do wanna be fair, right? Fair to the record. Um, in v- uh, in the language, looking through the, the allegations from the FTC documents, it wasn't clear if it was $9 million, it was said both ways, [00:18:00] $9 million every year for five years, or if it was just $9 million.

Either way, it's really, really bad, right? No one benefits from that. And, uh, Gerry, go to you. You're, you're a free market guy. We know you are. What, what do you think about this? What do you think when USAP, one of the largest anesthesia companies in the country, is paying one of the other largest anesthesia companies?

Yeah. 

Gary: I, I- Yeah ... again, that one's a hard one to defend in, in any business strategy, right? That you're paying your competition to stay out of the market that you control. So, um, it, it's, it's a hard, it's a hard one to recover from, and that's the type of things that are going to bring more government intervention into anesthesia, which is never a good thing, in my opinion, is- 

Joe: Mm-hmm

Gary: once the government gets involved, then you'll have, you know what? We need to cap... Let's cap, uh, CRNA salaries. Let's cap MD salaries. How, how, how- Mm-hmm ... well does that work, right? It doesn't. Yeah. It never, 

Joe: it never works. 

Gary: It's so- It never works ... it's, um, it, it's, uh, that's a hard one to get past there. So I, I don't...[00:19:00] 

I see why, uh, they've gotten some bad press lately, 'cause similar happened in Colorado a few years ago, right? And they, uh, they kind of were told they had to, to vacate several- That's right ... health systems in Colorado. Mm-hmm. So, you know, th- they're being painted as kind of the big, bad, uh, aggregator or big, bad private equity.

It, it's not a good look for USAP, really. I think that they're gonna be the m- the... They're gonna feel the most pain from this, right? Yeah. And hospital administrators are gonna wanna steer clear of them. 

Joe: I, I think so. And you know, what we're seeing in the market, um, is that they're, they're contracting, they're pulling back from a lot of places.

Still, still, still there's some whispers about acquisitions, but we'll see if that plays out. Tracy, what do you think this $9 million item? I can't imagine any of your businesses are paying other businesses to stay out of the market. It's why, I mean, I'm laughing 'cause it's, it's like, geez. 

Tracy: Yeah. You know?

It's, it's like living in, in bizarro world, right? 

Joe: Yeah. 

Tracy: You know, to, to say it's a bad look, 'cause I, I had the same statement in [00:20:00] my mind that Gerry said. You know, it's a bad look for them, and, um, it... That's an understatement. I mean, th- this is, this is quite frankly appalling, uh, that- 

Joe: Yeah ... 

Tracy: that companies would do this and even consider doing this.

The... Of, of course, it's alleged. We don't know what, what really occurred or what did- Yep ... not occur. Um, but look, what, what's not alleged, which is 100% factual, is that their consolidation of markets wasn't on accident This was 100% intentional. This was part of their business plan. It's been in, in some of the documents that have re- been released publicly, and the entire intent of that consolidation in those specific geographies- 

Gary: Mm-hmm

Tracy: was to be able to get better rates and control cost of providers. Um, so that's again, from a business standpoint, wow, that makes great sense. From an ethical, regulatory, and legal standpoint, yeah, it's not, not really illegal in this, in this environment. So, um- Not to this 

Joe: degree. Not to 

Tracy: this degree. Not to this degree.

No, not at all. [00:21:00] And look, the other thing is, um, you know, we mentioned that hospital administrators are, are getting fed up with them. We, we- 

Joe: Mm ... 

Tracy: we, we're in the same geography as USAP is in, in several of our regions and several of our 

Joe: areas. Can you, can you make a special announcement? Is, uh, any contract announcements you wanna make right now, Tracy?

Not to put 

Tracy: you on the spot. 

Joe: Just kidding. 

Tracy: Uh. Well, I'll plead the fifth on those. That's right. But, but what I can tell you though, when their rates are that much higher, hospital administrators are willing to overlook a lot of sins because when they can get enough revenue to decrease or eliminate a subsidy from a hospital- 

Joe: Mm-hmm

Tracy: they're, they're really, they're, they're willing to turn a blind eye a lot of times. Yeah. Absolutely. Or whether it be a poor service or whether it be ethical practices, if they can save a hospital 4 million bucks in anesthesia subsidies, that's a compelling case, right? Mm-hmm. Uh, 'cause when someone like me or Guide or, you know, Anesthesia, uh, Essential Anesthesia, or any of the other groups by and large will go in and compete, they're gonna run their pro forma, they're gonna see [00:22:00] what their revenue generation model spits out, they're gonna see what their costs are, and with the revenue being significantly lower because you saw the gap, sometimes it's nearly twice as much reimbursement from commercial payers- Mm-hmm

that USAP was able to get. When they see that, that gap gets transferred to the hospital in the form of a subsidy patient-- uh, payment. So, you know, I, I think there's-- they are constricting. They're doing it, um, very methodically. Part of it was required by the federal government. The, the federal government said, "Hey, you can no longer be this concentrated in this market.

You have to give these up." Right. I say the federal government- Yeah ... actually it was the Colorado AG in Colorado. Mm-hmm, mm-hmm. But the federal government's stepping in in different markets as well too, and different state AGs. But what we're not seeing publicly that we're seeing somewhat in, uh, in certain geographies and privately is that USAP is consolidating a bunch of their contracts to the contracts that really provide them the best margin.

Gary: Hmm. Yep. 

Tracy: So [00:23:00] they're in areas where they're- You're seeing that too? Oh, I'm seeing it too. Yeah. Absolutely, yeah. We're, we're seeing it in a bunch of places. You know, certain, certain hospitals and certain, um, hospital systems, for example, they're not having the good margins. They're not- Mm-hmm ... uh, able to fully staff all of their centers in that geography.

So they're carving off the ones where they're not profitable and moving all the staff that they can to their more profitable locations that add them, gives them more stability, gives them a better foothold on the market. We're seeing that in multiple cities.

Joe: We are outpatient in Florida and yeah, the, it is like a fallback and retreat like crazy. And, and I, like you said, and I just, they can, I mean, if more of your margin or more of your customer base is with those bigger systems, you gotta, that makes sense. Uh, I think one of the themes here is to what degree, right?

Uh, I, I'm gonna butcher this quote, but the idea is sound, which is when Adam Smith was talking about the beauty of, you know, the invisible hand of the free market, the beauty of the free enterprise system, [00:24:00] it's this, you know, capitalism, very corrupted form that we have right now, but the idea itself is quite good.

The two enemies of that, that ver- that system, my view, are number one, um, whether it's, you know, monarchies or oligarchies or communism or whatever, the, none of those work, right? But the other one is monopoly, right? You-- A, a good free enterprise system has all these elements, but not to this degree, right?

Every, every single CRNA, every single anesthesiologist in the country right now is making more money than they were, uh, five years ago, much higher than the rate of inflation. That's the free enterprise system at work. It's great, it's beautiful, it's wonderful. Uh, but when we see companies using this, uh, their market power to effectively negatively impact the market itself, like the entire system, that's when it gets bad, right?

And when you're paying people to stay out of a market and not compete, that is a no-go. Gerry, go ahead. 

Gary: Again, I think a lot of this is kinda the fruit of a poisonous tree, right? So [00:25:00] years ago, they were-- private equity was buying out anesthesia practices and paying a king's ransom, and a lot of, lot of anesthesiologists got very wealthy.

And how they were generating the top-line revenue to cover that massive debt on their balance sheet was by going, uh, out of network. And they were basically driving up reimbursements or basically taking it out of the hide of the patients because they were non-par. So it-- I think it kind of inflated the, the drive of salaries going up because you had to generate more top-line revenue.

The no surprises, that kinda changed that, right? So now they can't grab it from there. I'm not saying there's bad staffing companies out there, but these staffing companies that are carrying a lot of balance sheet debt, you gotta fund that debt no matter what, right? If you lose, if you lose contracts, now you have a smaller pot to pay that [00:26:00] debt service, right?

So- Yeah ... I try to rec- I recommend staffing companies quite often, and I say find ones that are willing to partner with you. 

Joe: And if they're named Essential or Guide, you know, uh, those are great names, you know, to consider. I'm just putting it out there, all right, for anybody, anybody listening. Keep going, Gerry.

Gary: And, and where I think some companies went wrong is, you know, they had a lot of debt, and they had a lot of debt service they had to make, and they took that as they had a gun to the, to the health system's head, and they would pound on the desk. "So, all right, I'm gonna pay you an awful lot of money, and you're not gonna bend for the surgeons.

You're not gonna, you're not gonna add hours. You're not gonna work Saturday mornings to do, you know, GI colonoscopies for the people that are- that are working all week. And it's really created kind of a backlash at a lot of staffing companies. And if you're a staffing company and you're, you're willing to work with your hospital administrators, I think you're in a pretty good spot.

But this kind of stuff is, again, I'm not, [00:27:00] I'm not passing judgment, but when the allegations are that you're paying your competition to stay out- Yeah ... smells like collusion, and n- nobody likes, likes that. It's a bad thing. Yeah. It's a bad thing if you're carrying a lot of debt on your balance sheet if you're a staffing company.

Joe: That's right. Well, that, that debt creates a lot of pressure, right? Ultimately, that results in more pressure they have to exert on the relationships. Uh, one comment when I posted this on, uh, a social media group was during this when, you know, Envision got nine million dollars and I got a 58 cent per, per year raise.

58 cents was the raise for the CRNA that year. And, uh, I don't know the details, of course, but it's still like, yeah, it's not good. You, you can use the market to consolidate power, but not to the degree where it damages the market for everybody. I think that's the litmus test. Uh, let's switch, uh, briefly. We got, we got another bit.

We wanna talk about the, uh, acquisition from Crew, but I wanna come back to this story, uh, very briefly. This is a, a broad story. We s- we spoke about this a few weeks back. Just by way of example, there's 4,000, uh, nurses that went on strike at Mass [00:28:00] General Brigham back in July. They actually came to a deal, but the hospital had already brought in 1,300 replacement nurses.

So, so they actually told the real employed nurses that, "Hey, you can't come back. Sorry. We've already hired the temps. We've gotta pay them. They've gotta work," and that's exactly what happened. Fast-forward a little bit more, and the nurses union submitted a complaint to the labor board. They are actually talking about striking again.

This is public, and I will share that this comes in the context of major union activity in California. There is an active vote going on right now as I, I believe the vote is either today or tomorrow for Banner University, which-- or Banner Health System, which is here in my local state, so a lot of this activity is going on.

This is a big trend going on in healthcare. It's going to affect the anesthesia. There are anesthesiologists and CRNAs that are unionized. And Tracy, let's come to you on this general trend on uni- unionization. 

Tracy: Oh, Joe, um, I, I don't know where [00:29:00] to start. 

Joe: It's all right. We- we got a lot, we got a lot of time, a lot of episodes ahead of us, so it's all good.

You don't have to get it all out today. 

Tracy: Uh, from a personal standpoint, I, I, I think unions have done some really good things for, for labor in the United States. You know, specifically when, when conditions were deplorable, working in mines and those types of things, and 60-hour work weeks, uh, limited pay, no health insurance.

Um, unions really helped to transform labor in this country. Uh I tend to have a little bit of an issue when professionals start to unionize. I'm a big fan of the free market economy. I think capitalism, by and large, works, as long as there is a regulatory framework to prevent some of the things we were talking about u- about with USAP.

And in a sense, it, it is working, right? USAP abused the system, the government is stepping in, things are happening to, to correct that. Um, but with professionals, um, professionals [00:30:00] that are well-compensated, well-trained, well-educated, it, it's makes it harder to really feel like they're being abused. And they could be, right?

They-- It could be bad work conditions. Their com- the compensation, um, could be considered low. But I, I, I feel like the free market often corrects for that. If we look at the anesthesia market, supply is down, demand is up. Compensation for CRNAs have gone up, up, up, up since, uh, since COVID, and it just works, right?

From a personal standpoint, this one's a little tough for me to wrap my head around. Um, but I don't wanna upset the, the unionized nursing out there and then get them all throwing- You're gonna get a, you're gonna get a letter 

Joe: now ... 

Tracy: yep, get them throwing- ... throwing stuff at me and stuff like that. Oh. But it's a little harder for me to wrap my head around, but I'm not living in their shoes, right?

I'm reading headlines. I'm looking at news stories. So yeah. 

Joe: Indeed. Gary? Gary, what do you think here, man? What are you, what are you hearing? Well- What are you seeing? 

Gary: Uh, you know, it's funny. S- some things in your career happen early, and they impact you for, [00:31:00] for, for the rest of your career, right? So I got in this business 29 years ago.

I, I came from the finance side. I was a CPA. And the first week I was on the job, this is unrelated to this discussion, uh, one of the s- the MDs in an anesthesia group in the northeast wanted to beat up the, the president, who was an older anesthesiologist in the group, and we had to get a security guard t- to walk him out to his car.

I said, "These people are crazy. How did I get in this crazy business?" Uh, a few months later, though, and th- this is amazing, I can't believe this is coming back around, is- Hmm ... uh, we worked with a big group out in, in, um, in the east here, Pennsylvania, and they-- the CRNA signed in, they signed up for a union.

They, they were u- and they were represented- Where, 

Joe: where was this, Gary? 

Gary: Pennsylvania. 

Joe: Okay. 

Gary: They- 

Joe: Are you able to share what town? 

Gary: I don't know if I t- I don't know. I, I don't know. 

Joe: Wasn't this, like, 20 years ago? 

Gary: Phil- phil- 30 years ago. Philadelphia. 

Joe: Thir- 

Gary: Okay, 

Joe: Philadelphia. Okay. 

Gary: Um, so, so they were part of the Teamsters, believe it or not.

That's who the union they signed on with [00:32:00] And we met with them, and the guy that I met with, I mean, I felt like, you know, if, if I make him mad, I may have a few broken kneecaps on my way to, on my way to the car. 

Joe: Yeah. Phil- Philadelphia people are... We, you know, we, we threw batteries at Santa Claus. 

Gary: And at the time, we agreed with them, they insisted on it, this is really dating myself.

Th- they- their salary was $65,000 a year, but there was a demand for CRNAs, and the hospital down the road was paying $70,000 a year, right? 

Joe: Mm-hmm. 

Gary: And they were like, "You need to up our, you need to up our salaries. We're, you know, blah, blah, blah." I said, "Well, you signed the contract, right? Like, you're locked in for three years.

I'd love to give you some more money, but we can't," right? So, uh, uh, you know, six months later- Mm ... they de-unionized, they pulled themselves out of there. 

Joe: So it sounds like union signed a deal for 65K, right? Hospital down the street adjusted to 70K. Union said, or union people, the people in the union said, "Hey, we want that, we want that number."

And the union, [00:33:00] and, you know, basically they were already locked in for, like, a three-year deal or whatever it was, so they couldn't adapt. 

Gary: And again, I only know anesthesia. People ask me- Yeah ... "Do I, do I know anything else?" I said, "I can probably spell radiology, but I'm not a hundred, 100% sure." Okay. Uh, but you know, in a market where there's such a shortage for anesthesia talent- What's the value of a union, right?

You're paying union dues, they're gonna control your negotiation. If you're treated badly, you vote with your feet, right? Mm-hmm. You, you say, "I'm not gonna, I'm not gonna work for Guide anymore. Joe Rodriguez is mean." Now, I'm sure nobody says that. "And I'm gonna go work for Tracy Young 'cause he's nice." So the point is, there is no value to this.

And I, um-- other nurses, that's fine, but I think CRNAs are, are-- would be insane to join a union. I just-- I don't, I don't see what the value is 'cause they can go anywhere they want. Yeah. 

Joe: I think, you know, and I'm, I'm not sure on the professional aspect in the sense of, you know, pr- [00:34:00] professionals unionizing has always been looked down upon.

I believe there are some regulatory, um, blocks in certain states. But, you know, when I, I hear this union like, um, there were some insightful, inspirational creators talking about this online, and they're basically like, "Union's good, hospital system's bad, private equity bad." And I get really skeptical around very broad statements, right?

And we're-- now, look, we-- with the pri- prior segment, I think we all pretty much established that some, uh, big companies, some private equity companies or companies owned by private equity do bad stuff. To me, the essential question is, you've got all this power or this organization, this framework, what are you doing with it, right?

And it really doesn't matter if it's a union or... To me, my, my view is it doesn't bother me if, you know, if an MD or, or an RN or whatever they want to unionize. I, I get it, you know, um, organize together, workers unite, all that sort of thing. Uh, but I think the bottom line is, are they running it well? Unions, to your [00:35:00] point, Tracy, you said, you know, there's a place for those unions.

They did a lot. They responded to the market they were in. They responded effectively, right? They created better working conditions, five-day work week, forty hours a week, all that sort of thing. Things that we take for granted now. But eventually, and this is not my deep area of, uh, expertise, but we know that eventually things got out of balance.

They became corrupt, right? Like, things were not running well. These-- you had the union executives making tons and tons of money. You had GM, uh, the f- the famous story, the stereotype was you had workers that were getting paid for doing nothing 'cause they were part of a union, and that decreases the value for the consumer.

It made American, um, made American industry less competitive. So to me, the question is not union or private equity. It's, you know, what's the character of that organization or a health system, right? Are they doing good things with their resources, generating value for the people in their organization, or are they not?

Just slap whatever label you want on it, but, uh, we will- 

Tracy: Mm-hmm ... 

Joe: we will see how this all, all proceeds. Any, any closing [00:36:00] thoughts on this union aspect, guys? 

Tracy: To me, it comes down to balance Right. Where is the balance of power? Who has the most leverage? And when that-- basically, if you're thinking of, of leverage as a seesaw, right?

Too- one side has too much power, the seesaw is lopsided. Um, when that gets out of balance, things, things can go awry, right? As long as- especially if you don't have a good ethical system, a good moral system to, or even a legal framework to keep things a little bit more in balance. It's easy for big hospital systems to get a lot of leverage over clinicians, right, and over providers and over nurses and those types of things.

During a supply shortage, it's easy for the providers, the CRNAs, the physician anesthesiologists to get too much leverage and exert too much power over the hospital systems. There's this yin and this yang and this give and this take. Um, you also mentioned the abuse of power that some of the unions have had in the past, right?

They're there to be a [00:37:00] voice for people without a voice, right? They're there to give leverage to people that historically have not had leverage. Well, then they started abusing their power, right, over the people they were meant to protect and to assist. It, it's all about balance, and things are continuously, uh, teetering one way or the other- Mm-hmm

whether it be hospital systems, whether it be providers and CRNAs, and whether it be unions. And I think regulatory and, uh, fiscal policy is usually way too slow to act and usually do not correct that, that seesaw. Private markets tend to do it more efficiently. They tend to do it better. Gerry said it perfectly.

CRNAs speak with their feet. They're not being treated well. They're not being compensated well Go somewhere else. 

Joe: Yeah. 

Tracy: And it happens all the time. 

Gary: Yeah. That's right. H- honestly, I'm probably 10 years away from retiring. I'm 58, maybe not 10 years, a [00:38:00] little l- less than that, but I never thought I would see this come back around, that- Mm-hmm

CNAs would wanna join a j- join a union. I'd... This is one of those that took 29 years, but it, it's like Halley's Comet. It, it went around the universe- That's right, man ... and now it's back. I think it's just doesn't make any sense to me whatsoever. It's, 

Tracy: uh- Joe, Joe, one more thought before we move on too.

Absolutely. Please. And I think it could be argued that CNAs maybe have already started union- unionizing on a national scale through social media. 

Gary: Hmm. 

Tracy: I see posts all the time- Yeah. True ... that says, "Never accept a job for under $200 an hour. You're doing a disservice to your profession," yada, yada, yada.

That's a form of anti-competitive unionization, right? Uh, and shaming other providers to do these things. Um, understanding the, the framework of anti-competitive laws and r- and restrictions on groups of people coming together to setting rates and wages in a marketplace, that's [00:39:00] anti-competitive. The Federal Trade Commission has a lot of guidance on that, but we openly see CNAs making those statements on social media.

"Never accept a rate below this," et cetera, et cetera. Whatever the rate du jour is of the day, right? Um- Mm-hmm ... but when you have two people coming together to negotiate a contract, that's undue influence. That's undue... That, that is influencing a marketplace potentially in the form of unionization without the protections of having a union.

Does that make any sense? 

Joe: Oh, for sure. For sure. Yeah. It's social pressure. I, I think in those same comment threads, they say, "Well, that's not fair," right? People say that's not fair, and I, I just for anyone listening, the no one, the fair, just take the word fair out of your mind. There is no fair in this thing, right?

It's only people pay for providers what they're willing to pay, and whether it's great and it's amazing, awesome, good for you. It has nothing to do with fair. It just has to do with that's what they're willing to pay. That's how the market- Yeah ... works. And, and when you use social media, [00:40:00] right, uh, you're totally picking up what you're laying down.

I do wanna get your, your- Yeah, and on, on the 

Tracy: flip side, Joe- Yeah ... people are willing to accept what they're willing to accept as well, too. 

Joe: That's- 

Tracy: Right? That's right. It, that's the power of negotiation. It's two parties coming together, finding a win-win solution. 

Joe: Absolutely. I, you know, I always on the individual, since we're going down that thread, on the individual, uh, compensation aspect, I always tell people, uh, first, uh, you know, a lot of times groups will adjust proactively, which is always good.

But sometimes, you know, a case needs to be made. I always say, "Look, there's two ways to go in there, two main ways. You can pound on the table like Gary was saying earlier. That's just gonna make the other side say, 'Buzz off,' no matter what you say, 'cause I don't like you now." But if you go in there and say, "Hey, let's, let's get some data.

Let's look at the market. I, you know, I at least wanna be competitive. I love working here," that goes a lot better, right? And that's, that's always how I've done it. It's, it's worked out well. 

Gary: At the end of the day, you can look at any survey, you can look at anything, the compensation is the smaller portion of a reason why people stay in a, at a, in an organization or in a health [00:41:00] system.

Are they valued? Are they treated well? Do they like their job? Is there flexibility in staffing, right? People are willing to take less money if they don't take call, they only work 7:00 to 3:00, their kids are in school, and- 

Joe: Sure ... 

Gary: it, it's, uh, th- the money isn't gonna pull people away, right? It has to be a good place to work and a good environment to be in and a good culture.

So it gets lost in the, you know- You don't wanna have an adversarial relationship with your employer. I'm s- I mean, that when you go into the union- Or 

Joe: your union. 

Gary: Yeah, exactly. 

Joe: Or your, or your house- health system. 

Gary: Right. 

Joe: Or whoever you're working for, or your partner, whoever it is you're working with, right?

Gary: Correct. So 

Joe: yeah, makes sense. All right. Let's switch over. This past week, added this to the docket just the list last week, CHG Healthcare acquires Crew Anesthesia. This is a relatively new company, this c- came across, uh, this is their news release. This came across all the socials as well, and I got a little curious.

I said, "Who in the world is CHG Healthcare?" They [00:42:00] also own, uh, CompHealth, Weatherby, Global Medical Staffing, Locumsmart, NurseSmart, Modio Health, CareerMD. These are known names. CHG Healthcare is owned by Leonard Green Partners, and through the power of Google, uh, it doesn't take long to find this information out.

Like, this Leonard Green Partners was related to Prospect Medical Holdings, which was a separate company. Leonard Green Partners is a private equity company. Prospect Medical Holdings was a separate company. That is who owned Crozer Health in Philadelphia. That's... I'm familiar with that system. That's where Villanova used to have a program.

Gary: They're shut down now. Crozer's g- gone. You know that. Yes. Yeah. Yeah. 

Joe: Crozer is gone. Yes, and that's a good, that's a good segue. Uh, and it-- this is a really interesting topic, and this is not to criticize Crew, but it is to understand the broader dynamic that's in healthcare now. Um, at a very-- We don't have time to go into all the details, and we can certainly come back to this deal and, and discuss it more.

But Leonard Green, Prospect Medical Holdings, Crozer Health, uh- [00:43:00] Debt-funded dividend, right? This came under a lot of scrutiny, including from United States Senate, Leonard Green, Prospect Health specifically, uh, effectively used debt to fund distributions or dividends, and that debt somehow, again, I'm-- this is a very broad summary, ended up on the books of Crozer.

I'm sure there's a whole lot of detail to it, but I think this is worthy of discussion as our last segment for today. What is happening when Leonard Green, who owns CHG Healthcare, who now owns CRU, what are the impacts here? And there's, there's, there's a whole lot. You know, we've had, you know, Randy on before with Cranemere.

We've talked about Warren Buffett and, you know, that whole type, type of firm. But Tracy, let's, let's get to you first. Uh, you probably have the most, uh, background on all this. You've been watching these things for a long time. Let's, let's get your thoughts. 

Tracy: Uh, I'll start off with, um, I do know the two founders of CRU Anesthesia.

They're, um, they're from the same area as me. Uh, know the guys. I do [00:44:00] know that they work their tails off. They built CRU up into a, a locums and staffing company that, that grew very quickly and did... From, from all accounts and-- that I've heard, they've done a really good job in the marketplace. Yeah, 

Joe: we, we've used CRU before, and they did a good job.

I 

Tracy: have as well too. I have as well too. And they've done a good job, and, um, I wanna say kudos to them, right? Because I think it's easy to criticize someone that does well. And I don't know if it's a nursing thing or if it's just a societal thing, but when someone has success and potentially, um, you don't wanna say sell out, but they've, they've, they've had an equity deal here, so they've sold out some equity.

It's easy to kind of villainize that and think that, you know, they're just greedy and money hungry. But when they were working 80-hour weeks and building this thing- Mm-hmm ... and then busting their tails, they weren't doing it for the good of society. They were doing it with a profit motive, and you can't... It is what it is, right?

And, and they've done a good job there. [00:45:00] And the, the locums market is very, very cyclical. I've seen it through my 25, 27 years in the anesthesia market where locums companies are well valued, and then all of a sudden we get an oversupply, and you can't give away a locums company, right? Uh, and it goes up, and it goes down.

Mm-hmm. And kudos to these guys. I, I, I don't know if they intentionally knew this or not Or if they were even thinking about it, 'cause I'm not involved in this transaction at all, but they sold kind of at a peak, right? Locums companies are doing well. The demand is there. 

Joe: CHD is now looking at their deal documents to see if they can lower the-- like get some of their money back.

Get 

Tracy: some of the 

Joe: act- Like they're wondering if they- Call back ... overpaid suddenly. Yeah. 

Tracy: Um, but look, so, so they sold at a peak. They've-- I'm sure they've been rewarded handsomely for the work that they've put in. Kudos to them. On the flip side of that, CHD probably bought this with more debt. LGP, you've already mentioned, has a balance sheet with a fair amount of debt on it due to, uh, we could get into that in [00:46:00] some more details, and we can talk about like dividend recapitalizations and why some of the dividends are paid out of debt versus cash flows in a moment.

But, you know, when interest rates are low and profit margins are strong, debt makes a lot of sense to these big groups. That, that's how they manage a lot of their growth. That's how they, they use debt effectively and efficiently No problem. However, interest rate starts going up or margin compression starts to happen, you see what happened to Envision.

They had to file bankruptcy. Mm-hmm. 

Joe: That's 

Tracy: right. They had billions of dollars on their debt sheet, and they could not pay the interest on their debt based on the profitability of where they were coming out of COVID. So- 

Joe: They're owned by their lenders now. They're, they're not 

Tracy: even a private- Basically, 

Joe: yes.

Tracy: So when debt is low-- I mean, interest rates are low and margins are high, debt seems like a great idea. When those, those variables start changing, it all-- you get in trouble, right? But if you could file bankruptcy and not have to pay the people that you owe money to, [00:47:00] then what's the big deal? File bankruptcy.

It's an interesting dynamic. 

Joe: These stories are-- have increasingly come into the zeitgeist, into the, the spirit of the age, where you have influencers talking about the, the evils of all this, and there probab-- I think there's some legitimacy to that. To get back to the idea of if you're a big company and you have influence, what are you doing with that influence?

Are you creating value, or are you extracting it and leaving society to hold the check, so to speak? And I don't know with enough detail, but it's at least worthy of discussion. Gary, you mentioned it earlier, that debt service, depending on the details, creates a lot of financial pressure, which does result in higher expenses that have to be charged to a hospital or charged to a payer.

Less money you can pay your providers. It makes them less competitive overall. It's a problematic dynamic. Uh, we're gonna see more and more of this. But Gary, what are your thoughts here when you see these anesthesia companies getting acquired by companies who have a, [00:48:00] a balance sheet or debt? 

Gary: Well, I mean, I, I've been on this kind of on the front lines recently.

I know the, the guys from Crew as well, and we've had two, um, investors reach out to us and wanted to talk to us, and they, they weren't investors. They were, uh, small locums companies. And what's happening now, this is a reaction to the market, right? Hospital administrators hate dealing with anesthesia, right?

They hate staffing. They hate worry about the ORs being covered. So these locums companies are smart. They'll say, "Hey, we'll just-- we'll manag-man-manage all the ORs for you. We'll get the locums in here." And these are morphing into management companies. And it makes sense, right? Because if you gotta call a locum company anyways to get staff, why don't you just make it their problem?

And then let them manage the whole department. So we've had two people reach out to us and say, "Hey, if we do this, will you do the billing for us?" And it's very difficult to bill for locums, right? Because, you know, you need a parent group, and then you're gonna have to create a tax ID to start, and they're gonna be given the [00:49:00] lowest rates in the market, which isn't g- Yeah, it's, it's like a startup

which isn't, which isn't gonna help the hospital, the hospital, uh, subsidy. It's gonna make it worse. So I think when you see things like this is the losers in this market when these companies be- kinda get consolidated are gonna be the heavy debt-lading staffing companies, right? Because th- like, Accru, I don't kn- have no idea what their balance sheet would look at, but I'm sure if they were providing a big chunk of locums to a facility, they can manage it for a lower fee because they don't have to carry that debt service.

So I think this is just gonna morph into another national staffing company where it's not just locums, it's gonna be staffing, management, et cetera. 

Joe: Yeah, they'll be, uh, they'll be competing with Essential before too long, right? Maybe. Who knows? Uh, you know, Accru... And Accru, for the guys, I don't know the guy.

I've run into him before. They seem like nice guys. You guys are always welcome to come on and, uh, give some comments, all that sort of thing. But- 

Gary: It, 

Joe: it- Go ahead. Go ahead, 

Gary: Gary. Yeah ... in a way, it's smart business. They're solving [00:50:00] a problem for hospital administrators, right? Mm-hmm. Instead of you calling five locums companies, just call me.

I'll, I'll handle all the locums. Oh, by the way, we'll do the billing. By the way- Of course ... we think you're gonna generate X number of dollars. We'll guarantee that, right? And, you know, we'll know based on last year's revenue you're gonna hit at least X, so that, your delta's gonna be... So this is just a, this is just an evolution of locums companies getting into the management side.

Joe: Yeah, it'll be, uh, it'll be interesting how it plays out. Tracy, to your comment on the owners of Kru getting it off the ground, uh, anybody who started that sort of thing, it-- there's nothing like it in the world. There's nothing like it in professional life. Um, I had a conversation a number of years ago where a very, uh, you know, we'll call them...

They, they were probably a fan of, uh, Mom Dani or something like that. M-much more of that mindset, right? And they said something along the lines of, 'You shouldn't be making any money off me.' And I said two points. I said, 'Well, first, you know, in our company, you [00:51:00] know, eighty to ninety percent of dollars goes to our clinicians, so who's making money off who?'

And I said, 'Then second, how much money did you make last year?' And she said, 'About three hundred thousand dollars.' And I said, 'Oh, that's interesting. I made two hundred and fifty thousand.' She's like, 'What do you mean?' I said, 'When I stepped into this role, it's not a clinician role, number one, and number two, I just had to make less money because we don't have the money.'

Right? We're in the middle of a huge transition. This was a number of years ago now. Uh, had to switch to the business side of things, had to renew-- renegotiate tons and tons of contracts, and it's like, no, you make more than me. So who's making money off who? Like, and I, and I hold all the financial risk, right?

Like, if we can't pay our bills, I have personal guarantees that I'm gonna have to give up some of my personal assets to fund things. So anyway, so in that sense, absolutely absolute credit to the people who took that risk, uh, and you know, that's, that's how the market works. And if you're on an individual level, you're submitting the risk of your time and getting paid for that time, and you're-- there's no delays in your payment.

That's how it should work. Absolutely. It's just, it's an [00:52:00] interesting thing. Go ahead, Tracy. I hear you. 

Tracy: So yeah, you, you can see it in my face. So I heard a quote the other day that, um... And it was the first time I've ever heard this, that the check cashers in today's environment are doing better than the check writers, right?

Gary: Hmm. 

Tracy: Um, and it stuck with me. It's probably a month ago I heard that, and it, and it's true, especially in the anesthesia space. But circling back to Kru and CHG, this is a classic aggregation story, right? Just like we talked about USAP aggregating and consolidating into their markets, they were a lot more intentional about geographies.

CHG is just more intentional about, in general, aggregating anesthesia staffing, locums, and potentially some management as, as Kru starts looking at, you know, getting outside of just locums staffing, which is I believe was their core whenever they started, uh, and they start diversifying a little bit into some of the other areas.

Um, CHG already owns a bunch of locums companies and staffing companies and those types of things. So this just kind of makes sense, and they saw value there. [00:53:00] They saw value in adding something else in their portfolio to continue to consolidate and aggregate more of these businesses. And, you know, whatever their investment thesis is, it was worth it to them to more than likely not spend their own money, but to add debt to their balance sheet to acquire another company.

And what that means is if, if I'm gonna use hypothetical numbers, if Kru makes ten million dollars a year There are banks that will be willing to lend them a certain multiple of that EBITDA and that profit, and they can now use that profitability as basically collateral on the loans to be able to buy the business that they're buying.

So they're, they're 

Joe: using- It's cheaper to, cheaper to borrow than it is to spend your own money, 

Tracy: effectively It's cheaper to borrow than to spend your own money, and they're using the EBITDA, the profitability of CRU and other companies [00:54:00] to expand their borrowing limits to acquire more companies. 

Joe: When you explain it at that level, it makes a ton of sense, and again, hope they're successful.

I think maybe bringing it all full circle, yeah, there's more scrutiny on these companies than ever before, and if they're providing more value to American society, to anesthesia, to anesthesia clinicians, no one's gonna complain, right? If they are extracting value and leaving society with the check, then there's gonna be more scrutiny.

There's gonna be more people testifying at health committees, all that sort of thing. Gary, go ahead. 

Gary: Yeah, a- again, I just think it's a good business model. And w-what, what's the old an- analogy? Uh, do a job that no one else wants to do, and do it well, the world will beat a path to your door, right? So they are, they are going into and solving a hospital's problems of anesthesia staffing, and it works, right?

One-stop shopping. I mean, I, I work for- That's right ... a company, we, we sell one-stop shopping. We'll, we'll give you an [00:55:00] EMR, we'll, we'll, uh, gather your quality information for you, we'll work inside your hospital system if you want us to. So when you make it easier for the consumer, you're gonna be successful.

And that's how I read this, is they're trying to make it easier for the consumer of anesthesia, which is really the health systems and the facilities, and that's why they're- Yeah ... this is happening for them. So good for them. It's, uh, yeah. 

Tracy: And look, I, I don't think, I don't think any of that is new and novel.

Right. Mm-hmm. I think every anesthesia management company, that's what they do. 

Gary: Yep, exactly. 

Tracy: That's what anesthesia management companies do. The only thing that's different here is that CRU started as a locums company and started realizing that maybe they can do some anesthesia management as well too.

Gary: Yeah. Yeah. 

Tracy: It'll be- So there's nothing new and novel about it. It's what Joe does with Guide. It's what we do with Essential. That's right. It's what USAP does. You know, I mean, it's just, it's, it's nothing unique. It's just bridging a gap from temporary staffing to full-time staffing, essentially, and adding some management components [00:56:00] as well too.

Joe: We'll see if they start offering checks to their competitors like, uh, alleged USAP did. We'll, we'll have to see Uh, let's, let's close out with just, I know we got a hard stop in about two minutes here, so we're gonna go over this pretty quick. Rick, uh, we wanna close with a listener question today. Uh, Rick, a student nurse anesthetist from X University, not gonna out the university, but I plan on working out in New York.

I would find it interesting if you had someone who has experience in New York dis- discuss the work climate. I've observed that it's super restrictive, so we're going very, very local here. Just curious on the general politics of, of it all and, uh, looking for advice. Uh, so we'll close out here. Tracy, brief thoughts for our listener question.

Tracy: Yeah, not, not one of my markets. However, um, I've also observed that New York seems to be relatively restrictive, uh, for CRNA scope of practice in general, right? But New York is a, it's a state, it's also a city, so I'm sure there's a lot of variety out there, um, uh, practice variety out there in New York as well.

Joe: Indeed. Gerry, any, any thoughts for this young man, [00:57:00] for Rick? 

Gary: Y- yes. I mean, again, I think it's very lucrative to live up in, uh, New York for all anesthesia providers. But there has been some nasty lawsuits up there with some of the major staffing companies and health hospitals. They try to employ their staff, they end up in, in lawsuits.

There's, uh, nasty restrictive covenants. So, you know, if that's the place you wanna live, you're gonna make a, you're, you're gonna make a very high salary, but cost of living is very high in, especially around New York City. Uh, but it is a restrictive state. It really is, is that they're gon- you're gonna be asked to sign a, a non-compete that may be 50 miles from where you live, and that's tough in anesthesia, right?

Is, you know, there's to leave 50 miles to go get another job is tough. So yeah, there is some truth to what, what they've heard is, is accurate. 

Joe: Indeed. Indeed. And Rick, I'll just let you know, you gotta decide what you want, young man. If you wanna be in New York, near family or whatnot, you're just gonna have to adapt to the environment.

[00:58:00] If you want better opportunity, go west, young man, which is the old quote from a very old movie. Exactly, right. 

Tracy: Yeah, some closing thoughts today. I, I think these topics were really interesting, and being able to dig down below the headlines and kind of understand motivations, what people are doing, some of the government, um, restrictions and, and talking about these in more detailed and a more nuanced manner was really fun for me today.

So I just wanna say thank you for that. And, and also thanks for not having Randy Moore on with me. You know? It was, it was good to have some variety and get to, and get to chat with Gerry. And I say that in jest. I love Randy. Love you too, Gerry. 

Gary: No, I appreciate it, Tracy. Yeah, I, I agree with Tracy, is this is not your typical podcast.

I think you're trying to provide people with insight that will help their career, you know, down the road and now is understanding how things work, because this is, uh, it's good to kind of peel back the onion and figure out what the drivers are in some of these things. 

Joe: I love it, guys. Thank you so much.[00:59:00] 

Uh, seriously, thank you, guys, for-- You guys have immensely busy schedules. I know, uh, your time is valuable, your insights are valuable, and the motivation here was to elevate Incredible voices in a, in a just a really fun and accessible way, right? And like we have this power of, you know, hyper-accessible media, right?

So let's start to use it for good, use it in a balanced way and, uh, and go from there. So that's a great way to leave it. Thank you guys for being on. Really appreciate you both. Uh, we will have more guests in the future. We're probably gonna add a fourth at some point, uh, just to, just, you know, with all the schedules and whatnot, just to make sure we're, uh, we're always well-staffed and whatnot, to use that term, and we'll leave it there.

Thank you, guys. 

Tracy: All right. Awesome. Thanks. Thanks, Joe. 

Joe: All right, everybody. Well, I hope you enjoy that show. We're-- This is getting deeper and deeper every week. I feel like we need to book it for two hours, but you'd probably get bored at some point. Uh, I do want to invite the audience, if you're listening, you can tell we're, we wanna be responsive to you.

We started today off with some feedback. We ended with a question. There's a lot of ways to reach [01:00:00] us, so social@abouttherest.com. You can visit our website, abouttherest.com. I am active on all the socials, whether it's TikTok, Instagram, LinkedIn, so on and so forth. And we connect to the show itself. That's where a lot of the clips will come from.

You can also check out Human Content Pods, who is the producer of this show. They do an outstanding job, so if you're looking to create, you should check them out. We're of course, of course on YouTube, and thank you for everyone listening so far. So I'm your host, uh, Joe Rodriguez. Our executive producers are myself, Aron Korney, Rob Goldman, and Shahnti Brooke, who's producing this episode right now.

Thanks for being on, Shahnti, and moving this episode around so many times so we could get it scheduled. Our editor and engineer is Andrew Sims, and our music is by Omer Ben-Zvi. To learn more about About The Rest's program disclaimer and ethics policy, submission verification and licensing terms, HIPAA release terms, lawyers make us say all these things.

You can go to abouttherest.com or reach out [01:01:00] to us at production@abouttherest.com with any questions, concerns, or any other insights you want to share. About The Rest is a Human Content production.

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